Four Seasons Goes to Paris

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9-803-069 REV: JANUARY 8, 2003 ROGER HALLOWELL DAVID BOWEN CARIN-ISABEL KNOOP Four Seasons Goes to Paris: “53 Properties, 24 Countries, 1 Philosophy” Europe is different from North America, and Paris is very different. I did not say difficult. I said different. — A senior Four Seasons manager In 2002, Four Seasons Hotels and Resorts was arguably the world’s leading operator of luxury hotels, managing 53 properties in 24 countries and delivering what observers called “consistently exceptional service. For Four Seasons, that meant providing high-quality, truly personalized service to enable guests to maximize the value of their time, however the guest defined doing so. In 1999, Four Seasons opened the Four Seasons Hotel George V Paris (hereafter, “F. S. George V”), its first French property, by renovating and operating the Hotel George V, a historic Parisian landmark. Doing so was, according to John Young, executive vice president, human resources, “one of our great challenges and triumphs. Young mused on what Four Seasons had learned from opening a hotel in France, wondering what lessons would be applicable to other openings given the firm’s growth plans, which suggested that new opportunities would be largely outside North America. (Exhibit 1 illustrates property locations in 2002. ) Performance Four Seasons generally operated (as opposed to owned) midsized luxury hotels and resorts. From 1996 through 2000 (inclusive), Four Seasons revenues increased at a compound rate of 22. 6% per year. Operating margins increased from 58. 8% to 67. 9% during the same period. Four Seasons’ 2001 revenue per room (RevPAR) was 32% higher than that of its primary U. S. competitors and 27% higher than that of its European competitors. (Exhibit 2 provides summary financials. ) ____________________________________________________________ ____________________________________________________ Professor Roger Hallowell of Harvard Business School; David Bowen, Dean, Faculty and Programs, and Professor, Thunderbird, The American Graduate School of International Management; and Carin-Isabel Knoop, Executive Director, Global Research Group (HBS) prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2002 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to https://www. hbsp. harvard. edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. 803-069 Four Seasons Goes to Paris: “53 Properties, 24 Countries, 1 Philosophy” Management Structure and Team Structure A general manager responsible for supervising the day-to-day operations of a single property oversaw each Four Seasons property. General managers had a target bonus of 30% of base compensation. A quarter of the bonus was based on people measures (employee attitudes), 25% on product (service quality), and 50% on property profit. Four Seasons management believed that the firm’s regional management structure was “a key component” of its ability to deliver and maintain the highest and most consistent service standards at each property in a cost-effective manner.

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